A stage model for multichannel CRM - Ituaviation.itu.edu.tr/img/aviation/datafiles/Lecture Notes/Airline... · (now Pega), we looked at how companies adopt CRM across numerous industry

A stage model for multichannel CRM

Hugh Wilson, Aly Richards, Emma Macdonald, Moira

Clark, Aamir Khan & Lindsay Bruce

Cranfield Customer Management Forum

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Contents

Introduction ............................................................................................ 1

The case for CRM .................................................................................. 2

A stage model for CRM adoption in a multichannel environment.. 6

Integration maturity ............................................................................ 10

Data integration................................................................................................ 10

Task-independent data management ......................................................... 11

Channel independent task management .................................................... 12

Extending the single customer view to indirect channels ............................ 12

Communications integration ........................................................................... 13

Process integration ......................................................................................... 14

Integrating multichannel processes ............................................................ 15

Structure integration ....................................................................................... 17

Metrics integration ........................................................................................... 19

Measuring multichannel consistency .......................................................... 19

Interaction maturity ............................................................................. 24

Individualisation ............................................................................................... 24

Customer value orientation ............................................................................. 29

Customer centricity ......................................................................................... 30

Dynamic interaction ......................................................................................... 31

Customisation .................................................................................................. 32

Appendix 1: Planning for CRM: the benefits dependency network35

Appendix 2: Profiling your CRM maturity (diagnostic tool) ......... 39

References.............................................................................................. 43

Additional contributors ................................................................................... 43


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List of tables and figures

Figure 1: The triple benefits of satisfied customers .......................................................... 3 Figure 2: A stage model for CRM maturity ....................................................................... 6 Figure 3: Towards a flexible CRM architecture .............................................................. 12 Figure 4: Scenario analysis, courtesy of IBM ................................................................. 16 Figure 5: Scenario analysis and emotions - a travel company ....................................... 17 Figure 6: BT Global Services channel collaboration ...................................................... 19 Figure 7: Differences in multichannel consistency across customer groups .................. 23 Figure 8: Channel chains - General Motors Europe ....................................................... 25 Figure 9: Inviting interaction - GM's email newsletter ..................................................... 28 Figure 10: Customer profitability of large and small customers ..................................... 29 Figure 11: O2's Vision system ........................................................................................ 32 Figure 12: Benefits dependency network: a gift manufacturer's website for retailers .... 36

Table 1: Five dimensions of integration maturity ............................................................ 10 Table 2: The importance of multichannel consistency ................................................... 20 Table 3: Five killer questions to check multichannel consistency .................................. 22 Table 4: Five dimensions of interaction maturity ............................................................ 24 Table 5: What makes great customer experience? B2B and B2C contexts .................. 33

Multichannel CRM – a stage model

1

Introduction

In the great majority of businesses, most profits come from repeat purchases, or continued relationships. As we were writing this report, one of the authors paid a visit to Cranfield’s Café Bookshop and returned with this story:

“Amy (one of the owners) greeted me by name, asked how things were going, presented me with a double-shot cappuccino without asking, and told me about the lunchtime specials that were likely to appeal to me, including my favourite parsnip and coconut soup. Somewhere within this one-minute masterclass in CRM she asked me to write a sentence of recommendation of the bookshop for new students, and asked me what books she should ensure were in stock for the arrival of the new MSc intake. The colleague I had arranged to meet there said that Amy had guessed who he was, told him that I would be arriving in five minutes or so, and provided him with a coffee on account. Somehow, by the time I left, my wedding anniversary present and card were bought and wrapped as, being a man, I had left them until the last minute…”

Such experiences are remarkable although not always easy to achieve or manage in a multichannel world. In a single-channel business such as Cranfield’s Café Bookshop, the ‘CRM’ is done in the heads of the staff. Entrepreneurs provide this level of service and customer lifetime value management as a matter of instinct: as the well-known Chinese proverb has it, “A man without a smiling face must not open a shop.” But when one interaction occurs in a call centre, the next online and the next in a bank branch, maintaining the same degree of proactive personalisation is significantly harder. In this paper, we discuss the mechanisms that all but the simplest businesses need to put in place in order to treat different customers differently. We begin by briefly reviewing the case for long-term relationship development. We summarise the stages of CRM maturity which, our research has found, companies go through as they strive to make the best of every interaction with every customer. We then outline the ten components of world-class CRM, under the headings of integration maturity and interaction maturity. Finally, as appendices, we describe an invaluable tool for managing cross-functional CRM projects, the benefits dependency network and offer a diagnostic tool to profile your firm’s CRM maturity.


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The case for CRM

Acquiring customers can be expensive. Usually it involves

certain one-off costs, such as, for example, advertising,

promotion, a salesperson’s time, commission to

intermediaries and so on. Thus, every customer represents

an investment, the level of which will vary from business to

business. If they are treated correctly and remain customers

over a long period, there is strong evidence that they will

generate more profits for the organization each year they

maintain the relationship.

This trend holds true for many sectors. As the relationship

extends, the initial ‘contact’ costs, such as checking

creditworthiness, no longer figure on the balance sheet. In

addition, the more that is known about the customer as the

relationship develops, the more offers can be tailored

effectively to meet their needs. Thus, the customer gets

greater value, which in turn encourages more frequent and

larger purchases. It follows, therefore, that when a company

lowers its customer defection rate, average customer

relationships last longer and profits climb.

There is evidence that few companies bother to measure

customer retention on a regular basis, while even fewer

measure customer retention by segment. Yet high customer

retention is beneficial to most businesses, not just because

of lower acquisition costs, but also because retained

customers tend to spend more. Furthermore, satisfied

customers who stay with the company are also more likely to

praise the company to others, further lowering acquisition

costs. A simplified version of the service-profit chain is

represented diagrammatically in Figure 1, showing the triple

benefit of high service and experience quality.


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Service

quality

Customer

experienceRetention

Acquisition

Share of

wallet

Advocacy

Customer Profitability

Figure 1: The triple benefits of satisfied customers

You might reasonably ask: If retention results from a great

customer experience, isn’t relationship management just a

matter of delivering a great service, with retention

automatically following? Well, yes and no. Certainly a high

level of product and service quality at an acceptable price is

essential to retention. UK bank First Direct has excellent

retention and advocacy rates because its service standards

are so high, despite having CRM processes such as cross-

sell mailings which are little different from those of its

competitors. And without such a high customer satisfaction

with existing products, the firm does not have permission

from the customer to propose a cross-sell.

And for businesses with intermediaries between them and

their end customers, who cannot develop their own

individualised relationships, a good customer experience can

be the only game in town. FMCG manufacturers have

traditionally been in this position – though the maturing of

retailers’ loyalty cards and social networking both now give

them vehicles to begin to build their own one-to-one

relationships with consumers.


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However, where the firm has access to individual customer

data, there are many things the firm can do to develop the

relationship with a satisfied customer, by proposing other

goods or services which they might find valuable. And if this

is done well, it feels like service to the customer and hence

enhances retention as well as increasing the share of the

customer’s wallet in the product/service category. In fact, if

the firm does not proactively suggest things that would help

the customer, it can feel like being forgotten and neglected.

All too often, though, CRM is not this customer centric.

Bombarding our customers with unsolicited, unfocused direct

mail, or annoying them with clumsy cross-sell pitches at the

end of service calls, may be initiated by a CRM department

but it certainly does not represent best practice. Neither does

it work very well, even in the short term.

Fortunately, there is now enough evidence about what works

in CRM for us to be able to lay out the basic principles of

how to get CRM right. First, though, let us briefly cover the

subject of IT, as it inevitably crops up in such discussions.

This is not automatically a bad thing, but we need to

recognise CRM for what it is and not confuse it with

something it is not. In all but the simplest businesses it is

impossible to maintain an individualised relationship with the

customer across multiple touchpoints and multiple channels

without IT support. On the other hand, the IT will not of itself

deliver the benefits we seek. Because as an IT director once

told us (and we only exaggerate a little), those annoying

people called front-office staff keep on coming between our

beautifully crafted IT systems on the one hand and our

customers on the other.

So we have all seen ‘CRM initiatives’ driven out of the IT

department which have fallen flat on their face, to vanish

without trace a year or two later. IT, then, is a crucial

enabler, not the essence of the issue.

For the purposes of clarity, we suggest that an appropriate

definition of CRM is: The management of individual customer

relationships across functions, channels and products so as

to maximise customer satisfaction and customer lifetime


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value. In all but the simplest organisations, CRM is

underpinned by integrated customer data.

Even this starting-point of integrated customer data, though,

is far from easy. The fact is that no organisations can

become world-class at CRM in one step and this is why we

have developed a stage model to illustrate the steps through

which CRM tends to evolve in today’s multichannel

environment.


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A stage model for CRM adoption

in a multichannel environment

In a study sponsored by CRM software provider Chordiant

(now Pega), we looked at how companies adopt CRM

across numerous industry sectors by surveying 600 leading

European companies. The companies fell broadly into four

stages, shown in

Figure 2.

Interaction maturity

Inte

gra

tio

n m

atu

rity

1 Product transactional

2 Information access

3 Process efficiency

4 Intelligent dialogue

Separate

databases by

product group,

channel etc

Data warehouse

-Analytics

-Outbound mail

Integrated data

Integrated processes

Individualised, relevant

conversations

Figure 2: A stage model for CRM maturity

The figure plots these stages on two dimensions:

Integration maturity: The extent to which the organisation has an integrated view of each customer, supported by structures and metrics which encourage the management of customer relationships holistically across products, channels and functions.

Interaction maturity: The extent to which the organisation holds individualised, customer-centric conversations with its customers which the customer perceives as adding value and which optimise customer lifetime value to the firm.


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By the beginning of the CRM revolution in the 1990s, many

companies had evolved unthinkingly into the situation

represented by stage 1. Databases and applications had

grown up around the need to take customer orders for

different products, each of which often had separate

systems. Channel choices were often hardwired into the

systems, so in the case of an industrial goods firm, for

example, a salesforce automation system might take all

orders for larger customers, while a call centre for

distributors might take the orders for indirect customers. This

met immediate operational requirements, but made it very

difficult even to know what holdings a customer had across

the product range. While naturally individual firms may not

be exactly at any of the four stages, many companies today

are still closest to stage 1.

Stage 2, ‘Information access’, represents a common next

step. Changing front-line systems can be prohibitively

difficult. So often a compromise is reached, where data from

different operational systems is dumped (perhaps overnight)

into a back-end customer database, or marketing

warehouse. This can at least enable some key analytics

such as profiling of which segments customers fall into,

calculating their propensity to buy products they do not

currently hold, and so on. For batch processes like direct

mail, this insight can then be actioned in individualised

messages. But if the operational systems themselves are not

altered, it can be difficult to feed this insight back to frontline

staff in field sales, field service, call centres and so on.

Many loyalty cards run by retailers and travel companies are

at stage 2. Nectar is a UK-based loyalty card where the

consumer gains points from any of a coalition of retailers

from grocer Sainsbury’s to petrol retailer BP. Initially, the

only information collected by its central database, run by

Nectar’s coordinators Groupe Aeroplan, was the retailer

name and transaction value. This meant that its offers to

consumers were somewhat generic, and suffered by

comparison with the leading rival Tesco Clubcard, which

could offer highly individualised coupons based on basket

analysis. Once Nectar began to collect data on individual

product purchases, it was able to tailor its offers better,

leading to an increase in redemption rates from 13% to 18%


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in two years. This dialogue helps with retention as well as

share of wallet: customers of utility EDF churn 30-50% less if

they hold a Nectar card than those that don’t.

Some benefits, then, can be gained at stage 2, but it does

not make the best use of every touchpoint, such as when a

customer calls in. And service levels can still suffer if the

right hand does not know what the left hand is doing. If the

salesperson does not know about a complaint made on the

web yesterday, the customer will tend to conclude that the

firm does not care.

This, then, is the argument for integrated ‘CRM systems’:

customer databases with applications referring to a central

repository of information about the customer. Fortunes have

been made by shifting firms to stage 3 where these systems

from vendors such as Oracle and SAP replace the previous

front-office systems.

Here, there is a significant improvement on the ‘integration’

axis…but only a small one on the ‘interaction’ axis. That is,

having an integrated view of the customer will not of itself

deliver better conversations with those customers. It will

avoid the disadvantage that comes from front office staff not

knowing about past interactions, but will not, without further

work, create the advantage that comes from using this

information to increase share of wallet.

For this, we need stage 4, ‘Intelligent dialogue’. By this stage

– and few companies yet claim to be even near it – each

conversation with each customer is individualised and

relevant to their needs, irrespective of channel. Some

companies are achieving this in specific channels, but few

can yet provide truly individualised dialogues irrespective of

how the customer contacts them.

UK bank Nationwide has a good reputation for service,

meaning its customers are happy to have conversations

about buying further products from the bank. Its CRM team

develop propensity models which predict the likelihood of a

customer buying each product which they do not currently

hold. Many banks use this technology to improve the

targeting of direct mail, but Nationwide is unusual in being


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able to deploy it in inbound call centres, on the web and in

branches as well. Conversion rates, they find, are higher in

these inbound channels, when the customer is calling on

their own time when they want to be in conversation with the

bank, than in outbound direct mail. They are particularly high

when a human agent can help the dialogue, collecting further

insight which the systems are not aware of and ensuring that

any additional product is right for the customer.

We will now look at what is involved in developing integration

maturity in more detail, before taking a similarly close look at

interaction maturity.


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Integration maturity

Integrated customer data is certainly important, but it is not

the only challenge in enabling the firm to focus on

maximising the lifetime value of each customer. We will

discuss five key dimensions of integration maturity, which

are summarised in Table 1.

Data integration Having a ‘single customer view’ of each

customer across channels, products and

business functions

Communications

integration

Having a single person responsible for

coordinating all inbound and outbound

communications with each customer

Process integration Ensuring that the firm’s processes for

responding to each customer are joined

up through the customer journey, so

each step leads seamlessly to the next in

the eyes of the customer

Structure integration Having an organisational structure that

encourages all managers and front-office

staff to look after the interests of each

customer holistically and hence grow

their customer value

Metrics integration Having targets and reward systems

which encourage all staff to look after the

interests of each customer and grow

their value

Table 1: Five dimensions of integration maturity

Data integration

Mapping out of the customer journey soon reveals many

points at which data needs to be shared between different

touchpoints, if the customer is to feel that the organisation

knows what it is doing. The most obvious solution is for the

applications supporting the first channel – a website,

perhaps - to pass the specific information that is needed to

the applications supporting the second channel – perhaps a

call centre. But this soon results in a spaghetti-like set of

connections between systems, with many performance

issues and high costs of ownership. Even if it works, the end

result is an inflexible system in which it is very hard to evolve

the customer journey over time, as is frequently needed, as


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we saw in the previous chapter in our discussion of

multichannel routes to market.

A better solution, therefore, is to have a single central

database for key information about the customer – at least,

conceptually – with systems reading or writing to the

database as required. This has been one of the major drivers

of the substantial market for integrated master data and a

stronger information architecture, and for the growth of

broader, more integrated CRM application suites. Many

organisations are working towards a unified view of the

customer, so that all aspects of the customer interface can

be coordinated.

Task-independent data management

It is not sufficient, though to have a single repository of

customer data – difficult though that is to achieve for many

long-standing organisations with complex legacy systems.

The customer facing systems also need to manage customer

data independently of the task being performed. For

example, if a customer enters their name and address on a

website, they do not wish to be asked the same information

on the telephone. This requires all tasks to call on a single

module which manages this customer data. We call this the

principle of task independent data management.

This point can clearly be seen in Figure 3. The ‘task

management’ layer needs to be separate from the ‘data

management’ layer, rather than systems for each task

endeavouring to manage parts of the customer data, as is

still often the case.


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Face to face

Sales force

Seminars

Trade shows

etc.

Initiate

dialogue

Outbound

Inbound

Mail

Exchange

information

Outbound

Inbound

Telephone

Person-

computer

Person-person

Negotiate/ tailor

Personalisation,

specification

Price, terms

Electronic

WWW

E-mail

Other net

EDI

Commit

Order

processing

Mass media

TV

Radio

Magazine

Newspaper

Billboard

etc...

Monitor

program

Programme

effectiveness

Customer

satisfaction

Retail

Design

Program

Ch

an

nel

Man

ag

em

en

t

Task

Man

ag

em

en

tD

ata

Man

ag

em

en

t

ERP

Operations

/ logistics

External

data

sources

External

DBS

Mkt res

Supplier

• Us/competitors

• Products

• Pricing

Customer/

consumer

• Profile

Event/ transaction

• transaction

• contact details

Relationship

• NPV

Relationship

• NPV

Sells to

Data warehouse• Analysis• Planning• Monitor vs plan

Figure 3: Towards a flexible CRM architecture

Channel independent task management

Another point which is clearly illustrated by Figure 3 is the

importance of channel independent task management. The

‘channel management’ layer of managing different channels

or media is often bundled in with particular tasks. A ‘direct

mail system’ will be the way in which the organisation

generates leads; an ‘order processing system’ will assume

that orders come in to an order processing clerk (rather than,

say, being made by a website); and so on. Such architecture

is inherently inflexible. An ideal architecture separates the

issue of managing the medium from that of managing the

task.

Extending the single customer view to indirect channels

It is widely accepted, then, that maintaining an integrated

customer relationship is difficult if not impossible without an

integrated customer database linked across channels as well

as across products. Leading companies are extending this

principle, though, to data held about the customer by

intermediaries – indirect channels – as well as the

company’s own direct channels. The customer holds the

supplier responsible for agents, distributors and retailers who

provide frontline customer service, so it may be necessary to

share customer contact information with them, or even roll

out the CRM system to them, too.


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The logic for this is clear. Customers are likely to pass

between different channels during the same purchase

process and, for this reason, there needs to be data transfer

between organisations to make this transition smooth.

General Motors’ Dialogue programme is a good example. In

this CRM initiative, GM collect prospect information through

direct channels on such issues as when the prospect

intended to buy a new car and which models they are

considering. Near to the time of intended purchase, they are

therefore able to send local dealerships a list of genuinely

interested people, along with this information. Information

also needed to flow in the other direction if GM was to track

the success of the programme.

Details as to how this data sharing was achieved varied from

country to country. In three cases – Netherlands, Belgium

and Italy – an online tool was deployed with dealers to

distribute leads and collect feedback. In other countries,

leads were simply faxed to dealers and, if necessary, dealers

were chased on the end result by outgoing calls from GM’s

own call centres.

Communications integration

An integrated relationship with the customer can be undone,

though, by communications which are not joined up. All too

often, one unit is responsible for direct mail, another for

email, another for who is invited to seminars, a fourth for the

call centre, a fifth for face-to-face interactions. Stories of

advertising campaigns leading to a surge in traffic with which

the call centre is utterly unable to cope are all too common.

An insurance company rebranded after a takeover, spending

hundreds of millions of dollars on launching a new brand

name. The market research said that customers wanted

individualised service, so that was the theme of the

advertising campaign. Through mass channels. With no

individualisation. Once customers made contact with the

firm, they discovered that inbound channels were no more

personalised than outbound ones; 20% of existing customers

could not even clear security and get details of their account!


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The company continued to languish towards the bottom of

service quality tables, and in a Web 2.0 age, its customers

knew it. Thankfully cynicism doesn’t always pay!

Like all the integration challenges, communications

integration is not easy to solve. After all, we do need

specialists in managing call centres, websites and so on. But

someone has to be appointed with sufficient authority to

ensure that in the eyes of the customer, the experience joins

up.

Process integration

This integration needs to continue through purchase and

service interactions. And if the customer is to perceive the

journey as easy and joined-up, they will expect it to be as

straightforward as buying in a coffee shop.

Once we have integrated data, we have some hope of

joining up processes across functions, product silos and

channel silos. The fact that marketing doesn’t talk to sales or

service is no excuse for the systems to act as badly as the

humans. But this still requires some thinking through of the

customer journey.

In the IT trade, this is known as ‘workflow management’. And

it is indeed vital to map out the firm’s flows of work and make

sure that a customer contact seamlessly triggers the right

response. But it is important to note that the most important

workflow to understand and join up is the customer’s job, be

it making a complaint, booking an airline ticket or obtaining

advice.

First Direct is famous for its superb telephone service. But

80% of First Direct transactions are now online. This was not

achieved by giving away margin through price incentives.

Nor by reducing the quality of the existing channel. Nor by

insisting that the digital director delivered profits through that

single channel. No, the key was attitudinal. When the

website was being developed, the chief executive put signs

up saying: “How does it feel to the customer?” Because the

answer is positive, customers require no incentive to use the


15

service frequently, freeing up the call centre to concentrate

on value-adding matters like new mortgages.

By contrast, another financial services company found that

one office had such disastrous service levels that it was

thinking of closing it down. Buzz in head office blamed the

people. The customer experience director visited with a ‘hit

squad’. While a few of the staff did indeed seem to have

negative attitudes, the great majority were relieved to have

some attention. They poured out stories of the process

problems that got in the way of serving customers. To take

credit card orders, staff had to ask the customer to hang on

while they went to a different floor and queued to use the

only credit card machine. One agent taking orders in Euros

would ask the customer to wait while he called his retired

father at home, who would look up the latest exchange rates

on teletext…His father rather enjoyed it, but it was hardly

ideal for the customer experience! It wasn’t the people that

needed fixing but the processes. The office is now frequently

visited for the opposite reason – an example to others!

Integrating multichannel processes

One specific integration issue is how to ensure that the

customer experience is integrated across the various

channels in a channel chain. Scenario analysis is useful for

this.

Figure 4 shows an example in which a bank customer is

considering the purchase of an additional product. At the top

of the figure, the segment is brought to life by naming and

describing a typical member of it. Then a table is drawn up,

as shown, describing a walkthrough of the interactions

between this named customer and the bank as he conducts

the purchase. The walkthrough teases out ways in which the

channels need to interact and support each other in order to

deliver the ideal experience.


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Name: Peter Muller

Job Role: MD of an IT company in Frankfurt.

Background: Herr Muller has been a standard current account customer for the last seven years

and in that time his interest in investments and his financial sophistication have grown.

Current

Portfolio: Peter now has both a standard current account and flexible fund account. He holds

cash, funds and securities in his accounts.

Situation: He has a good relationship with his broker, but also uses direct channels, especially

the Web, for convenience.

Scenario: Buying Alternative Investment Products (AIP)

Task Channel Experience Implications

Initiate dialogue Mail Concise, signed personal note from broker, two weeks before annual review meeting, suggesting that Markus look into AIPs, with leaflet & Web URL

Integration of mail & face-to-face channels

Exchange information

Web Peter looks up his flexible fund account briefing on AIPs. He models impact on his investment portfolio using what-if facility

Extensions to Web-based portfolio management tool

Negotiate/tailor Face-to-face Peter discusses options with his broker. Together they decide on appropriate level of risk

Broker access to personal portfolios in meetings

Etc…. Etc…. Etc…. Etc….

Figure 4: Scenario analysis, courtesy of IBM

This process of ‘walking through’ scenarios, stepping into the

shoes of the customer to make sure that the movement

between the channels is smooth, can benefit from market

research to really ‘walk through’ the customer journey as it is

at the moment, in order to work out where the disconnects

are and how value can be better created for the customer.

This is illustrated in Figure 5, drawn from work in the travel

industry looking at the customer highs and lows through their

holiday experience. Travelling out to the holiday is often a

stressful experience, battering much of the positive

anticipation that has built up, to a point where some really

dramatic positive experiences are needed at the start of the

holiday itself if the mood is to swing up again rather than

continue on a downward path. The journey back is another

crucial time: even where this experience cannot be fully

improved, the memory of the holiday itself can be


17

reinvigorated by some warm communication soon

afterwards.

Case Study - Wingnut Travel

One critical dimension from the customer's perspective:

Trigger

sG

ather

ing

info

.

Sho

ppin

gM

akin

g th

edec

isio

n

Pay

ing

Build

anticip

ation

Pre

par

eto

go

Tra

vel t

o

On h

olid

ay

Pre

p. t

o

retu

rnTra

vel

from

Bac

k to

real

ity

Get &

use

rem

inders

Daily

life

+

-

Typical Emotions

?

Figure 5: Scenario analysis and emotions - a travel company

Structure integration

One reason why processes are not always integrated is that

different parts of the process are the responsibility of

different executives. If each business unit head is

responsible only for specific product lines or channels, there

may be no-one motivated to do the most important job of all:

maximise the satisfaction and lifetime value of each

individual customer.

One of the authors was in a workshop with the operating

board of a large European financial services company. Like

many such companies, business units were structured

primarily on product lines: pensions, mortgages, general

insurance and so on. The director of the protection business

unit, selling products which protect the individual against

events like redundancy, was bemoaning the fact that when a

financial adviser sold, say, a mortgage, they often did not get

round to cross-selling the protection product on top of it as,

for the adviser, this was a relatively small additional sale.

This was a shame, he said, as the margins on protection

products were high. He showed the figures and, indeed, they


18

were high. His colleagues, remunerated on the sales of other

products, were of course distraught at their fellow director’s

predicament.

The author asked why the protection product couldn’t instead

be cross-sold by the service centre when the customer

phoned in, as was bound to happen a few times in the early

months while setting up the mortgage. The directors looked

at him as if he was from Mars. How could one possibly

cross-sell from a service centre? It was a cost centre, not a

profit centre! And anyway, it belonged to the mortgage

business unit – the protection business unit had its own call

centre…

BT Global Services had a similar issue with their channel

transformation project. They moved some interactions

through to desk-based account managers, others through

the field sales force and yet others through the web or third

parties, and faced the challenge of motivating these

channels to collaborate. The answer was to keep these

channel specialists as a minor dimension of the matrix, but to

make the major dimension customers. Account directors

were responsible for total revenue from a group of customers

minus total costs – sales force costs, DBAM costs, costs for

tailored web pages, commission for distributors and so on.

This provided the motivation to the account directors to make

the best use of each channel. Meanwhile, individual staff

were remunerated not on revenue from their channel but on

total revenue for the customers with whom they worked. See

Figure 6.


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Account Management

Gove

rnm

ent

Finan

cial

Servi

ces

Com

mer

cial

& B

rands

Corp

orate

Mid

-Mar

ket

Field

Sales

Govt

Field

Sales

Fin Ser

Field

Sales

Comm.

Field

Sales

MidMkt

Desk Based

Resource

MB Channel

Marketing

DBAM DBAM DBAM DBAM

Bt.com

Partners

Figure 6: BT Global Services channel collaboration

Metrics integration

The BT story illustrates that just as structure needs to

encourage a holistic relationship with customers, so do

metrics. Important customer-focused metrics include:

Customer satisfaction

Customer advocacy, e.g. net promoter score

Service quality and experience quality

Customer retention (or its opposite, churn)

Number of product holdings per customer

Customer profitability

Customer lifetime value.

Measuring multichannel consistency

Multichannel journeys raise a particular challenge

concerning customer satisfaction. Most companies, if they

measure channel satisfaction at all, do so in each channel

individually. But how about consistency of the experience

across channels? We have seen that this matters to

customers; is it, however, reflected in what is asked in

customer satisfaction surveys?


20

Until now, the value of consistency across channels has

been no more than a widely accepted premise. But the case

for the importance of consistency has been strengthened by

two pieces of research from the Cranfield Customer

Management Forum.

The first involved a blue chip organisation delivering

products and services through a number of business to

business channels. This research confirmed what CRM

professionals have long suspected; consistency of

information, impression and customer knowledge across

different touchpoints (or delivery channels) is critical. In fact,

multichannel consistency ranked alongside product

satisfaction in terms of its importance in driving customer

satisfaction, trust and intention to repurchase (see Table 2).

We were taken aback by quite how important multichannel

consistency is – more so than website satisfaction, or call

centre satisfaction, or even sales force satisfaction. It seems

that, if the salesperson ploughs blithely on with their sales

pitch without mentioning the complaint which the customer

made on the web yesterday, customers are as unforgiving as

if the product doesn’t work.

What parts of the experience matter most in driving …

Customer

satisfaction

Trust Intention to

repurchase

1. Multichannel consistency

2. Value for money

3. Product satisfaction




2. Value for money


Table 2: The importance of multichannel consistency

As an important technical note to those involved in

commissioning market research, the results in Table 2 were

arrived at not by simply asking the customer what drives

their customer satisfaction, but by measuring customer

satisfaction, separately asking about multichannel

consistency, product satisfaction and so on, and then

correlating the two using such techniques as multiple

regression. This is a much more reliable way of assessing

how customers actually behave.


21

In the second project, the same approach was applied in a

business to consumer service organisation providing

entertainment. Customers were asked the equivalent

questions and their answers again revealed the importance

of channel consistency. Consistency of information,

impression and customer knowledge was the only factor

apart from satisfaction with the basic entertainment service

that each time appeared amongst the top three drivers for

satisfaction, trust and propensity to recommend.

Interesting it may be, but you might say this discovery is

hardly going to rock the marketing world. Marketers have,

after all, widely assumed the importance of consistency even

without such research based evidence. The challenge set by

this research is not that marketers should acknowledge the

importance of channel consistency, but that they should

measure it – to make sure that they actually do something

about it.

The billions that have been invested the world over in CRM

software systems on the basis that the ‘single customer view’

would deliver an enhanced customer experience might

suggest that organisations recognise the importance of

channel consistency. Yet most companies continue to

measure customer experience and satisfaction ‘silo-fashion’,

with survey questions related only to certain channels. Better

marketers benchmark their performance against competitors.

The most innovative not only ask customers how well the

company has performed, but also assess the importance of

each aspect of experience through techniques such as

multiple regression and structural equation modelling, to

make sure we do not waste time fixing aspects of the

experience that ultimately do not drive repurchasing and

advocacy behaviour. But even such relatively sophisticated

techniques fail to measure multichannel consistency.

So, how can you be sure that you are delivering a consistent

customer experience across different touchpoints? As CRM

system vendors will rightly point out, the software is

necessary but not sufficient. Whilst the system may deliver a

single view of the customer, it does not obviate the need for

staff to be adequately trained, equipped and motivated to


22

deliver an appropriate level of service. A bad tempered,

discouraged call centre representative is unlikely to deliver

good customer service, regardless of whether or not the

CRM system has highlighted a cross-selling opportunity.

Similarly, the fact that your CRM system identifies the

different service quality needs of customers will have little

impact on your online sales performance, if your website is

unable to differentiate between and meet those service level

expectations.

If you want to know that your CRM investment is really

paying off, you need to know that customers are receiving a

consistent experience across all channels. This, as we have

already discovered, is a core driver of customer loyalty and

propensity to repurchase or recommend. Equally important,

if you haven’t yet got it right, is to uncover the source of the

inconsistency. In doing so, you avoid being ‘blinded’ by your

CRM system and blaming it when the failure lies in your own

processes. Conversely, you also arm yourself with evidence

to hold the CRM vendor to account if it is, indeed, the CRM

system that has failed to deliver.

The solution is twofold. Firstly, you need to include questions

in your customer research that investigate whether the

customer experience is consistent across your different

channels. The five core questions used in our work with the

two organisations we have described cover impression,

information, choice and staff knowledge (see Table 3).

In addition to your other customer satisfaction questions, ask your customers to

assess their agreement with the following statements on a sliding scale.

I have a consistent impression from [company], regardless of the channel I use.

The information I get from [company] is consistent across all channels.

Regardless of the channel I use, people I deal with are informed about my past interactions with [company].

I can choose among a range of channels while dealing with [company].

Regardless of the sales channel I use to purchase from [company], I can use other channels to get information or help.

Table 3: Five killer questions to check multichannel consistency

Secondly, when respondents are matched with their main

purchase channel (or channel chain), their responses can be

broken down to identify where improvement is required. An

example of this is shown in the graph in Figure 7. From the

answers to this question, it is evident that customers in this


23

example who buy mainly from the direct sales force perceive

a greater level of consistency than those who most often buy

online or through resellers. Further investigation will then

reveal the source of this lack of consistency. It may be that

the company’s sales managers are particularly good at

recording information in the CRM system. Or it might be a

flaw in the online purchasing system or reseller extranet,

where data is poorly recorded or utilised.

Figure 7: Differences in multichannel consistency across customer groups

When it comes to customer satisfaction, companies are

eager to deliver a good customer experience. Traditionally,

marketers take a view from their customer insight and

measure satisfaction against factors that they believe are

important. But even relatively sophisticated techniques fail to

measure how consistent service delivery is across different

customer touchpoints.

Consider the cost of investment in CRM software by

organisations that fail to measure whether their CRM system

actually delivers what it set out to achieve. Is your company

one of them? Take a look at how your organisation

measures customer satisfaction. Multichannel consistency is

a crucial driver. With the amount that you invest in CRM, can

you afford not to know if it’s working?

Customer’s primary

purchase channel

0%

5%

10%

15%

20%

25%

30%

1 2 3 4 5 6 7 8 9 10

Agreement Scale

Sales Force

Online

Through Reseller

Regardless of the channel I use, people I deal with are informed about my past interactions


24


An integrated view of the customer, and an organisation

motivated to treat each customer holistically, are half of the

CRM challenge. And indeed, they are hard enough!

However, integration maturity is primarily an enabler of better

conversations, better interactions. We will now look at what

makes for powerful, value-creating interactions with

customers. The five key factors are listed in Table 4.

Individualisation Treating each customer in a way appropriate to everything which is

known about them

Customer value

orientation

Understanding the customer’s overall value to the firm, and taking

this into account when determining how to treat the customer

(without losing customer centricity)

Customer centricity Ensuring that every offer to the customer has the customer’s best

interests at heart, as well as the firm’s

Dynamic interaction Responding to what the customer says or does appropriately and

speedily, ideally within the same dialogue

Customisation In categories where this is relevant, tailoring the product or service

to the individual customer in accordance with everything that is

known about them

Table 4: Five dimensions of interaction maturity

Individualisation

The first principle is that each interaction with the customer

should be individualised. We want to be known as an

individual and treated as one. When we are, we respond

enthusiastically. Not surprisingly, sales propositions which

are individualised are far more effective than generic

propositions which are made to every customer.

We discussed earlier how ‘channel chains’ representing the

customer’s journey may include indirect channels such as

agents, distributors and retailers, as well as the company’s

own direct channels. Just as these direct channels such as

the web, call centres and the sales force often complement

each other, so indirect channels do not necessarily ‘own’ the

whole customer relationship; rather, they may be

complemented by the company’s direct channels in an

integrated channel chain. Maintaining an individualised


25

conversation across both direct and indirect channels is a

particular challenge.

GM’s Dialogue programme, that we mentioned earlier,

provides a good example of the step-change improvements

in customer acquisition and retention costs that can result

from getting this right. It is worth describing this programme

in some detail (Figure 8).

RAISE

AWARENESS

INITIATE

DIALOGUE

Mass

advertising

Trade

shows

DEALER

-Test drive

-Financing

-Configuration

-Negotiation

-Service

Mail/email

“handraiser”

Online

Mail/email

dialogue

Trade

shows

DEALER

-Test drive

- Financing

- Configuration

-Negotiation

-Service

Traditional: mass-market

transactional

New: multi-channel tailored

relationship

Mass

advertising

Mail/

email

External

lists

EXCHANGE

INFORMATION

PURCHASE &

DELIVER

SERVICE &

DIALOGUE

MAINTENANCE

Call centre WebOut: magazine

In: Info eg ERDConfiguration toolInfo eg ERD

Online

registration

Out: welcome pack,

magazine, service

reminder

In: cust satisfaction

data, ERDNote: ERD = estimated replacement date

Test drive invitation

Figure 8: Channel chains - General Motors Europe

The traditional channel chain used for consumer car sales is

on the left of the figure. The Original Equipment

Manufacturers (OEMs) such as General Motors have

traditionally had little one-to-one contact with the motorist,

direct consumer sales instead being supported through a

network of independent dealers. The manufacturer’s

communications role has historically been one way.

Advertising and product information is communicated to

consumers through broadcast media and, to a lesser extent,

more targeted channels such as direct mail. The aim is to

create awareness of the brand and drive traffic to the


26

dealerships. This model is analogous to that in most

consumer packaged goods.

However, this communication approach allows no direct

feedback from consumers as to whether they are ‘in market’

to buy or not, resulting in large amounts of wasted money

and effort, especially with infrequent purchase decisions.

There is also little opportunity to distinguish between

individual potential customers on the basis of model

preferences, purchase intentions, and so on.

For the motor industry, the internet opens up real

possibilities to move to a two way communication model.

The web offers an inexpensive channel through which

consumers could respond to and interact with OEMs, and

perhaps even purchase a vehicle online. The prospect of

OEMs selling directly via the internet inevitably sets alarm

bells ringing among dealers, though, and has forced OEMs

to think carefully before upsetting the distribution channel

they have been so dependent upon.

The niche for direct online sales is now beginning to be

significant, but GM’s Dialogue programme, trialled on the

new Vectra (launched in the early 2000s in seven countries

in mainland Europe), sought instead to explore the hybrid

solution shown on the right of the figure. The idea was to use

the internet to create relationships with customers which

might yield valuable information about their purchase

intentions and enable higher quality leads to be introduced to

dealers during the time window when they were preparing to

buy their next vehicle.

Cars are an infrequent purchase, but there is a high

incidence of repeat purchase. This suggests there is a

compelling case for maintaining contact with existing

customers during the years between them buying cars.

In tandem with the arrival of the internet, other developments

in hardware and software created the possibility to fully

integrate communications with consumers across a range of

channels, both online and offline. Advances in database

technology meant that it was much easier to ‘clean’ data held

on individual customers so that names could be readily and


27

accurately matched between purchase order systems,

acquired lists, those responding to promotions, and so on.

CRM software could then enable a complete view of the

consumer across channels, enabling a true two way

relationship to be established.

The new channel chain

In GM’s new channel chain, the initial expression of interest

could come via any one of a number of sources. In some

markets, mailing lists were built through purchasing

registration data; where this was not possible lists were

purchased through brokers such as Claritas, who offer the

possibility to filter for those who intend to buy a car in the

next 12 months. People who responded to these mailings

were termed ‘Responders’. A second group, ‘Handraisers’,

consisted of those who initiated the contact by registering on

a website, calling a freephone number, or taking a card from

a dealership or at a motor show.

In a simple example of giving some channel choice to the

consumer, these potential customers were then asked to

nominate whether they preferred to receive communications

by post or email. Much of the outgoing communication that

followed – for example newsletters and test drive offers –

could be sent electronically to those that requested it,

although some other pieces, notably the Welcome Pack

(provided on car purchase) and the prior to test drive offer

(called the Kitchen Table Pack), were delivered only in hard

copy.

A further use of the online channel was the development of

microsites for each model launch as an interaction and

information hub. The potential of these microsites was felt to

be so high that targeted mailouts were sent to post-preferring

prospective customers as well as those preferring email, to

drive traffic to the sites, which was also boosted through

point-of-sale material and so on. The microsites were linked

to the main website for Opel, the brand under which the

Vectra is sold in most of Europe, providing an opportunity for

prospective customers to register.

In certain aspects of the Dialogue programme, then – for

example launch advertising – GM continued to depend


28

largely upon one way, high volume channels such as TV and

print media. But in the subsequent phases, interactive

channels were essential to elicit the key information such as

the motorist’s estimated replacement date (ERD) that would

determine where the customer was in the buying process

and what products they might be interested in. Subsequent

pieces of communication could still be mass produced – for

example a newsletter designed to keep the prospect

informed and interested – but they would only be sent to the

consumer according to their own individual calendar, which

was determined by the ERD. A re-qualification process gave

prospective customers the opportunity to re-affirm their

purchase intentions in order to keep this vital data up to date,

such as the ‘Check/Update your details’ prompt in the email

newsletter (Figure 9). A high proportion of consumers,

feeling they were engaged in a relevant conversation, took

the trouble to update these details.

Figure 9: Inviting interaction - GM's email newsletter


29

A key objective of Dialogue was to supply dealers with well

qualified ‘hot’ leads at the point of readiness for a test drive,

rather than the poor quality leads generated by non-

interactive and non-relationship based marketing campaigns.

Ultimately, the programme aimed to better integrate GM’s

marketing with the work of this indirect sales channel.

GM made successful use of piloting and control groups to

measure the effect of the Dialogue programme on sales, and

found that the additional cars sold as a result of the

programme were equivalent to incremental revenue of over

300 million Euros and additional profit of over 50 million

Euros.

The simple tailoring of the dialogue with the customer was

far from one-to-one, but it was ahead of other manufacturers

within this industry which has traditionally left all customer

dialogue to the dealers. And it worked in the eyes of the

customer. It is proving highly influential as other car

manufacturers follow suit.

Customer value orientation

Another key aspect of effective CRM is ‘customer value

orientation’. This means understanding the value of each

customer, and taking this into account in the firm’s dealings

with the customer.

The importance of customer value orientation is illustrated by

those few firms which have processes in place to calculate

the true profitability of each customer. Where this can be

done, it is always insightful. An example is in

Figure 10.

T= -12

1 2 3 4 5 6 7 8 9 10

15

1716

1312

10

76

4

1

1 2 3 4 5 6 7 8 9 10

% of total companyprofits

Largest 10%of customers

Smallest 10%of customers

1 2 3 4 5 6 7 8 9 10

-3

26

29

2220

8

4

-3 -31 2 3 4 5 6 7 8 9 10

% of totalcompanyprofits

Largest 10%of customers

Smallest 10%of customers

T=0


30

Figure 10: Customer profitability of large and small customers

The chart shows the profits made from each ‘decile’ of

customers, from the largest 10% to the smallest, at two time

periods twelve years apart. The trend is alarming: at the end

of the twelve-year period, the major customers have used

their power to negotiate significant discounts simultaneous

with improved service levels, so they are actually losing the

company money. Channel specialists with low-cost models

are simultaneously serving the smallest accounts more

efficiently, so they are losing money, too!

This data is crucial if the company is to take sensible

decisions about how to treat each customer. The PhD

research of co-author Professor Aamir Khan, formerly of

Cranfield and now at Lahore University Management School,

found that this customer value orientation or ‘customer

selectivity’ is a strong driver of firm performance – stronger,

in fact, than market orientation within service sectors.

Customer centricity

Customer centricity means that propositions to the customer

should have the customer’s best interests at heart. In

common business parlance, they should be ‘win-win’ offers.

We have all been on the wrong end of cynical marketing

which captures our money for the wrong reasons. Exorbitant

charges made by one insurer to customers who wished to

cancel their car insurance halfway through the year were one

anger-fuelling example, damaging not just the external

reputation of the firm but also internal morale. (Call centre

agents would get round this restriction by advising customers

to say that they were cancelling as they were buying an

Aston Martin. At this point the agent would be obliged to say

that as they could not offer insurance cover for an Aston

Martin, the customer would not have to pay a cancellation

charge!)

There is no denying that it is possible to run a business with

such cynical practices. One of the authors recalls a

patisserie near Montmartre which sells beautiful-looking

produce which, unfortunately, tastes disgusting. The owner

has clearly calculated that the cheapest possible cooking oil,


31

rather than butter, will do for tourist customers who most

likely will never return, however tasty the produce!

Quite apart from the ethics involved, the good news for the

great majority who wish to go to work and earn an honest

pound is that customer centricity pays. Our survey of 600

companies demonstrated that those with more customer

centric cross-sell, upsell and retention practices were more

profitable relative to competitors. Given the economics of

lifetime value, the power of word-of-mouth and the

importance of employee motivation, this is not surprising.

Dynamic interaction

One related feature of good customer conversations is that

they should be dynamic. That is, the firm should respond

appropriately depending on what the customer says.

Listening, learning and responding is at the heart of normal

human relationships, so it is no surprise that it is crucial in

commercial encounters. A tailored direct mailing is a form of

dialogue, which might be a response to something the

customer said to the firm several weeks earlier, but it is

hardly as dynamic as a conversation in a store, in a branch,

in a sales meeting or on the telephone. Not surprisingly,

therefore, these interactive channels at their best have far

higher conversion rates than direct mail, which like its cousin

email marketing becomes less effective every year.

And yet some companies manage these ‘inbound channels’

as if they were direct mail encounters, providing agents with

predetermined, carefully scripted prompts as to what to offer

the customer. A propensity model driven prompt to an agent

is certainly better than having no insight at all, but a prompt

calculated in real time during the call – taking into account

the reason that the customer called in the first place – is far

more effective.

O2’s Vision system, supporting agents within inbound call

centres is a case in point. The project was driven by one of

this report’s authors, Aly Richards, who was then Head of

CRM for O2. See


32

Figure 11 for an example of the agent’s screen. The bars in

the top right corner show the three products that the

customer is most likely to buy at this moment, based on

everything that is known about the customer, including the

reason for calling. The agent is not forced to talk about them,

but depending on their judgement of the conversation, they

are provided the tools to do so if they wish.

Figure 11: O2's Vision system

Because this interaction is customer centric, dynamic and

individualised, it is highly effective. O2 reports conversion

rates of consistently above 30% and often much higher.

Customisation

The final feature of mature interactions is appropriate

customisation of the core product or service. This is not

always relevant, of course, as, in some sectors, the

product/service cannot be customised. But in many contexts,

proactively suggesting appropriate variants of the standard


33

offer to the customer, taking into account everything that the

firm knows about them, can deeply impress the customer

and differentiate the firm significantly from its peers.

If you have never had cause to go to a Build-A-Bear

Workshop store, borrow a godchild, niece or nephew and

make them a tailored teddy bear. Mainly for the sake of the

child, but also as an example of adding value through

customisation. But keep a tissue to hand, as we challenge

anyone to be unmoved by the moment when the bear is

given its heart…

Customisation can come at a price in a higher cost of

manufacture or higher cost to serve, so it is not for every

category. But for experiential consumer markets such as this

example, mass customisation can still be cost effective. And

in many more relational business contexts, customisation is

essential. The reader with business-to-business selling

experience will need no persuasion on this point, but it is

nevertheless insightful to see the customer view of the most

important factors in their experience of suppliers – see

Table 5.

1. Extent of personal contact

2. Flexibility

3. Implicit understanding of

customer needs

4. Proactivity in eliciting

customer’s objectives

5. Pro-activity in checking that

everything is OK

6. Promise fulfilment

7. Knowledge

1. Helpfulness

2. Value for time

3. Customer recognition

4. Promise fulfilment

5. Problem solving

6. Personalisation

7. Competence

8. Accessibility

B2B B2C

Table 5: What makes great customer experience? B2B and B2C contexts

While the B2C list is dominated by customer service factors

like helpfulness, valuing the customer’s time, customer

recognition and so on, the B2B list has a strong emphasis on

understanding the customer’s individual needs and flexibly


34

providing a solution which meets those needs. This requires

a deep understanding of the customer’s business, of course,

so knowledgeable staff are paramount. Whatever the

contract states, what business customers really value is a

supplier who cares about their objectives and is prepared to

go to whatever lengths are necessary to solve their particular

issues. The loyalty that can result from suppliers going the

extra mile is incalculable.


35

Appendix 1: Planning for CRM:

the benefits dependency network

Our CRM stage model demonstrates that it is not possible to

move straight to world-class CRM; rather, a series of staged

projects is typically needed. Even in steps, achieving CRM

maturity is a major undertaking, requiring commitment from

the whole organisation. This is a far more complex project

management task than organising a marketing campaign.

Neither can it be delegated to IT, as we have seen. The

reader may be daunted as to how success can be gained.

There is no substitute for a high degree of commitment from

experienced executives with consistent backing from the

board. Nevertheless, a project management tool which is

specifically designed for IT-enabled projects which deliver

business benefits will be a significant help. A tool that many

companies have reported is highly beneficial is the benefits

dependency network (BDN). Developed by John Ward,

Elizabeth Daniel and their collaborators at Cranfield and

elsewhere, this tool works backwards from the project’s

objectives to ensure that all necessary business changes are

made, as well as any necessary IT developments completed.

A simplified example from one project the authors advised

on, a gift manufacturer’s extranet for retailers, is shown in

Figure 12.


36

IS/IT EnablersEnabling

ChangesBusiness

ChangesBenefits Objectives

Build

Web Site

Design

Pilot

Data

Warehouse

- Stock

- Orders

- Retailers

- Retailer/

Product

Performance

Design new

customer service

process

Pilot range of

retailer

relationships

Improve sales/

design/production

coordination

Renegotiate

distributor

contracts

Provide sales

info by line to

retailers

Provide automated

ordering/

replenishment

option

Product

review process

Run direct channel

for new retailer

recruitment

Reduce returns

Maximise Turns

Lower cost

of service

Surpass

competition

commercially

especially for

small retailers

Increase sales

coverage

Improve perceived

service

Remove

unprofitable lines

Increase profit

Increase turnover

Figure 12: Benefits dependency network: a gift manufacturer's website for

retailers

The main elements of the network are as follows:

First, drivers of the project are defined. A driver is a view by top managers as to what is important for the business, such that the business needs to change in response. In this case, the drivers (which are not shown in the figure) included the directors’ desire to expand beyond their current profitable but small niche, and their recognition that this would imply reducing the organisation’s dependence on a small number of large retailers.

The investment objectives are then a clear statement of how the project under consideration will contribute to achieving effective beneficial changes in relation to one or more of the drivers. In this example, the objectives related to turnover, profit, and market share of the small retailer segment.

In order to achieve these objectives, some benefits will need to be delivered to different stakeholders, including customers. These are now explicitly identified and quantified. For the gift manufacturer, these included maximising the number of ‘turns’ – how often an item on a retailer’s shelf is sold and replenished each year; minimising the number of returns; and so on.


37

In order to achieve the benefits, it is necessary for organisations and people to work in different ways, and it is these changes that are captured in the business changes part of the network. In this case, business changes included the need to offer retailers a variety of options for how stocks would be replenished. At one end of the scale, a retailer could choose to “outsource” much of the selling of gifts to a manufacturer-provided facility on the website, which could select and order gifts, keep them replenished, change the gift range according to past and predicted demand, and arrange payment. At the other end of the scale, other retailers could simply choose to use information provided by the website to inform their own decisions on what gifts to order, when to replenish and so on. By offering a choice, the retailer was left with the important sense of control.

Other one-off changes may also be required before the technology can be implemented, for example to define new processes which are needed, and to establish organisational roles and skills sets. These are termed enabling changes. Here, these included the renegotiation of contracts for the existing agent network, and a piloting exercise with a handful of retailers.

It is only when this analysis has been carried out that specific role technology will play in project’s objectives can be defined in detail. These technology changes are listed under IS/IT enablers. Here, they included extensions to the company’s core operational systems, as well as introduction of the website itself.

Working with the blue-chip members of the Cranfield

Customer Management Forum, we have found that using

this technique for CRM projects seems to require an iterative

approach. In more traditional IT projects the network is used

to ensure that the technology and business changes will

deliver benefits required to meet the business drivers. Given

the current stage of innovation with many CRM technologies,

a further iteration starting with ‘what can technology enable

us to do?’ is needed, to explore the potential changes and

consequent benefits that could result. Balancing this more

creative use of the BDN with the more outcome-focused,

analytical use proved valuable both in uncovering new

options and in realistically assessing what could be

achieved.


38

Although time-consuming to apply – a thorough BDN

typically taking two half-day workshops – this tool is

invaluable for fleshing out the business changes which are

needed to make the new use of technology effective if a

CRM project is to succeed. This can also lead to more

rational decisions on whether to proceed with a project: in

one case, a forward-looking BDN brought to light such a

scale of business transformation that the company decided it

could not currently afford to proceed.

What was the result of the BDN’s development in this gift

company? It pointed out that many of the business changes

relied on the managing director, clarifying the need for a new

sales appointment, which was rapidly made. It also made

clear that a pilot was needed to flesh out how retailers could

best be supported online, as well as how the organisation

needed to adapt to complement the Web site itself. Most

importantly, it convinced senior management that it needed

to devote enough time to the relevant business changes and

that this was not purely an IT exercise.

The company had experienced considerable difficulties in

the past with new computer systems, due not to the system

itself as much as the accompanying organisational changes

which had not been fully thought through beforehand. The

level of rigour demanded by the BDN was not universally

popular – salespeople rarely welcome being hauled into

meetings of any sort – but the company was left well-placed

to avoid a similar expensive mess.

The tool needs, though, to be used at the right point in the

planning process. Notice that it is not possible to get as far

as listing benefits which will be sufficient to achieve the

intended objectives, let alone listing business changes, until

the market is well understood and the strategic rationale for

the proposed project is clear.


39

Appendix 2: Profiling your CRM

maturity (diagnostic tool)

The diagnostic below profiles your firm’s current level of

CRM maturity. You can also use this exercise to study a firm

you believe to represent best practice within your sector.

Fill in this form to assess your multichannel CRM maturity. If

appropriate choose a business unit to fill it in for. If you have

several different customer groups (boxes on the market

map/value network), choose one group and fill in the form for

this group. For example, a pharmaceutical company could fill

in the form for hospital specialists, primary care practitioners

(GPs), patients etc. A financial services company could fill it

in for consumers, insurance brokers, company pension

schemes etc.

Step 1. Thinking of this customer group, to what extent do

you agree with these statements? Please score out of 7,

where 7 = ‘strongly agree’ and 1 = ‘strongly disagree’.


Score 1-7

Q1 Data integration: We have integrated customer data across all

products and channels, which gives us all the information we need

on a customer

Q2 Communications integration: We have a single person responsible

for coordinating all inbound and outbound communications with

each customer

Q3 Process integration: Our processes for responding to each

customer are joined up through the customer journey, so each

step leads seamlessly to the next

Q4 Structure integration: Our organisational structure encourages all

staff to look after the interests of each customer holistically and

grow their customer value

Q5 Metrics integration: Our targets and reward systems encourage all

staff to look after the interests of each customer and grow their

customer value

Total:

Integration score - Divide total by 5:


40


Score 1-7

Q6 Individualisation: Everything we say or

write to customers is based on

individual-level customer insight

Q7 Customer value orientation: We

understand the lifetime value of each

customer and take this into account in

all our dealings with them

Q8 Customer centricity: We put our

customers’ interests first when making

sales or service propositions to them

Q9 Dynamic interaction: What we say or

write to customers depends on what the

customer has said to us within the same

dialogue

Q10 Customisation: We tailor our products

and services to customers on the basis

of individual customer insight

Total:

Interaction score - Divide total by 5:

Step 2. Plot your company/business unit on the grid

overleaf. Which stage are you nearest? Of course, all

companies vary, so each stage is the centre of a ‘cluster’

and you may well be between stages, or stronger on

integration than interaction or vice versa.


41

Step 3. The tables below list the aspects or dimensions of

multichannel CRM maturity which we were asking about in

the questions on the previous page. What do you think your

company’s next steps could be to improve your multichannel

CRM maturity? Choose two or three questions/dimensions

where you think you could improve your performance, and

write how this might be achieved in the right-hand column.


Integration dimension How we might improve

Q1 Data integration

Q2 Communications

integration

Q3 Process integration

Q4 Structure integration

Q5 Metrics integration


42


Interaction dimension How we might improve

Q6 Individualisation

Q7 Customer value

orientation

Q8 Customer centricity

Q9 Dynamic interaction

Q10 Customisation


43

References

Bailey, C., Baines, P., Wilson, H. and Clark, M. (2009)

Segmentation and customer insight in contemporary

services marketing practice: why grouping customers is no

longer enough. Journal of Marketing Management, 25(3-4)

(July), 227-252.

Khan, A. (2008) Market orientation, customer selectivity and

firm performance. PhD thesis, Cranfield.

Lemke, F., Clark, M. & Wilson, H. (2010) Customer

experience quality: An exploration in business and consumer

contexts using repertory grid technique. Journal of Academy

of Marketing Science.

Ward, J. & Daniel, L. (2005) Benefits management:

Delivering value from IS & IT investments. Wiley, Chichester.

Additional contributors

The authors extend their thanks also to the many colleagues

at students at Cranfield and other business schools, and to

the many companies who have presented to the CCMF in

Cranfield or been interviewed by us for the Forum’s work,

whose ideas and experience have been summarised in this

report. Particular thanks are due to, amongst many others:

Dr Stan Maklan who co-authored the BT Global Services

case study

Rita Madaleno and Dr Krista Bondy for their work on

multichannel consistency

Dr Chris Bailey for her research into O2 and sales

through service best practice

Swati Phadnis for her statistical work on the stage model

Dr Fred Lemke for his work on experience quality

Professor Liz Daniel for her work on the Benefits

Dependency Network application we describe.


Forum Director: Professor Hugh Wilson

Research Director: Dr Emma Macdonald

[email protected]

www.cranfield.ac.uk/som/ccmf

Cranfield, Bedford, England, MK43 0AL

Telephone: +44 (0)1234 751122

Documents

A stage model for multichannel CRM - Ituaviation.itu.edu.tr/img/aviation/datafiles/Lecture Notes/Airline... · (now Pega), we looked at how companies adopt CRM across numerous industry